New med dispensing fee pleases some, chills others

Tuesday, November 30, 2004

WASHINGTON — Respiratory providers can expect a $57 per month dispensing fee in 2005 for inhalation drugs to offset the collapse in profits expected to follow implementation of the average sale price reimbursement formula.

Questions still linger, however, as to whether this is welcome news or a nail in the coffin for respiratory businesses.

“I was pleased with [the fee],” said Harold Davis, director of operations for VGM’s Nationwide Respiratory. “Obviously not as pleased as we were before the cut because the profit is still not going to be as good as it was. But, as far as patient care and still being able to provide a service and make some profit, you are going to be able to do it now.”

One of the lingering variables in November was the ambiguity in the rule over whether the fee was “per-patient per-month” or “per-drug per-month.” According to a CMS official, the rule will be adjudicated as a monthly fee per patient, which some providers call unreasonable because it does not take into account additional shipping and labor costs for multiple drugs.

Wayne Stanfield, president of Westan HME Services in Halifax, Va., said the cuts, coupled with $57 per- patient per-month, will result in a 76% drop in gross reimbursement for his company.

“I’m going to have a dump 1,000 patients,” said Stanfield, “What I am going to do with them and how I am going to do that, I don’t know. I don’t want to stop serving them, but I can’t do it at an average loss of $1,000 per month as it stands right now.”

Davis predicts a less damaging 30-35% gross reimbursement reduction under the new guidelines, but that’s not set in stone. ‘The dust is still flying through the air on this issue,” he said.

The $57 figure was disclosed in a Final Rule posted to the Federal Register in November. A figure between $55 and $64 per month had been expected following the release of a GAO report in October, but CMS surprised the industry by also offering an $80 fee per 90-day supply for those providers who want to switch distribution methods, according to the rule.

Most industry insiders say profit margins are higher with monthly shipments, but that ultimately the decision may not be up to them.

“I really do not think the provider gets a choice,” said Jacquelyn McClure, director of government relations for The MED Group’s National Respiratory Network. “CMS clearly states it is up to the prescriber and not the pharmacy to determine the 90-day ship. Therefore, I believe any prescription with two refills, dictates to the pharmacy to ship a 90-day supply or at least bill the $80/90-day fee without regard to the pharmacy electing to ship monthly. Any other interpretation would be considered fraudulent billing.”

CMS first hinted at allowing the shipment of 90-day supplies in a Notice of Proposed Rulemaking this summer. This fall’s GAO report, “Appropriate Dispensing Fees Needed for Suppliers of Inhalation Therapy Drugs,” concluded that allowing providers to ship 90-day supplies to patients could result in significant savings on labor and shipping and billing costs.

Providers sticking with the business will have to brace for a slew of other changes in 2005, as well. The rule, which included a list of all the new J-codes, eliminated compounding modifiers. It also waived the Assignment of Benefit requirement and increased the Part B deductible from $100 to $110 in 2005.

CMS was expected to release the revised fee schedule for the new J-codes in late November. The new fees will be based on the average sales price data, and the information could drastically impact the drug combinations being dispensed to patients, said Mickey Letson, president of the Letco Companies.

“There is a big plus to the patients in this whole process in that in the past there were certain drugs that a provider couldn’t dispense because they were too expensive and Medicare paid below what it cost the provider to buy them,” he said. “Under the new system there is not a single drug that I have seen to this point that a provider can not dispense without some profit from the dispensing fee.”